Matic supports delegation via validator shares. By using this design, it is easier to distribute rewards and slash with scale (thousands of delegators) on Ethereum contracts without much computation.

Delegators delegate by purchasing shares of a finite pool from validators. Each validator will have their own validator share token. Let's call these fungible tokens VATIC for a validator A. As soon as a user delegates to a validator A, they will be issued VATIC based on an exchange rate of MATIC/VATIC pair. As users accrue value the exchange rate indicates that they can now withdraw more MATIC for each VATIC and when users get slashed, users withdraw less MATIC for their VATIC.

Note that MATIC is a staking token. A delegator needs to have MATIC tokens to participate in the delegation.

Initially, a delegator D buys tokens from validator A specific pool when 1 MATIC per 1 VATIC.

When a validator gets rewarded with more MATIC tokens, new tokens are added to the pool. Let's say with the current pool of 100 MATIC tokens, 10 MATIC rewards are added to the pool. But since the total supply of VATIC tokens didn't change due to rewards, the exchange rate becomes 1 MATIC per 0.9 VATIC. Now, delegator D gets more MATIC for the same shares. Similar to slashing, if 10 MATIC gets slashed from the pool, the new exchange rate will be 1 Matic per 1.1 VATIC.

VATIC: Validator specific minted validator share tokens (ERC20 tokens)

Workflow of items

buyVoucher: This function is attributed when performing a delegation process toward a Validator. The delegation _amount is first transferred to the stakeManager where upon confirmation delegation shares are Mint using the current exchangeRate

Exchange rate is calculated as per below formula:

ExchangeRate = (totalDelegatedPower + delegatorRewardPool) / totalDelegatorShares

sellVoucher: This is function that is called when a delegator is unbonding from a validator. This function basically initiates the process of selling the vouchers which was bought during delegation. There is a withdrawal period that is taken into consideration before the delegators can claim their tokens.

withdrawRewards: As a delegator, you can Claim your rewards by invoking the withdrawRewards function.

reStake: Restake can work in two ways delegator can buy more shares using buyVoucher or reStake rewards. You can restake by staking more tokens toward a validator or you can restake your accumulated rewards as a delegator. Purpose of reStaking is that since delegator's validator has now more active stake and she will earn more rewards for that so will the delegator.

unStakeClaimTokens: Once withdrawal period is over delegators who've sold their shares can claim their matic tokens.

updateCommissionRate: Updates commission % for the validator.

updateRewards: When a validator gets rewards for submitting checkpoint this function is called for disbursements of rewards between validator and delegators.